RBS mortgage report highlights first-time buyer squeeze.

The latest RBS mortgage 'Ability to Buy Index' has highlighted the reason behind why most UK first-time buyers cannot afford to buy. The report shows that while average mortgage payments have fallen back to levels recorded in 2003, it is now more difficult than ever for first-time buyers to get a foot up. RBS says the quarterly Ability to Buy Index gives the most realistic up to date picture of the squeeze facing first-time buyers in the UK.

Fionnuala Earley, RBS Group UK Consumer Economist has said “Our new index provides the most accurate picture available today of the squeeze on first-time buyers, by including the effects of tax, National Insurance, earnings and rising living costs, in addition to house prices and interest rates.

The RBS mortgage first-time buyer 'Ability to Buy Index' has deteriorated for 3 consecutive quarters and shows that it is harder to buy now than in the 2009 recession which is in contrast to the house price to earnings measures which suggests conditions have improved. The rising cost of essentials during 2011 outweighed the effect of falling house prices and rising incomes on the ability to buy.

The RBS mortgage 'Ability to Buy Index' also contained some encouraging news. Low interest rates mean that even with pressure on household income, the debt-servicing burden has fallen to 2003 levels. It also advised that first-time buyers in the North, Scotland and Yorkshire and Humberside would be able to save a 10 per cent deposit in around two and a half years, which is good news for the housing market in those areas.